Nope. After nearly 3 ½ months of trying and despite a decent rally from the mid-November lows (1343.35—S&P 500) that brought the S&P within a few percentage points of its September 14 intermediate high (1474.51), and the best level since the lows of March 2009, the stock market remains as uncommitted as it was in early fall. While it’s true the Value Line index rallied to a new all-time high (3187.27) on December 20, that level was only a little over 1% better than the VAY high (3149.52) reached during the first week of May 2011. That is significant, because on a relative basis and despite the fact it has yet to make a new all-time high, the S&P 500 has outperformed VAY to the extent the S&P was last 2.3% above its May 2011 peak while the VAY had slipped back to a loss of 1.4% compared to May 2011.

Market Overview – What We Know:

On noticeably lighter holiday activity, major indexes pulled back modestly last week.

Market volume diminished 58% as compared to previous week.

Short-term trend turned negative and S&P 500 must now rally back above upper edge of 10-Day Price Channel (1439.28 through December 31) to suggest reversal of near-term trend back to positive. Intermediate Cycle remains negative until S&P 500 rallies above upper edge of 10-Week Price Channel (1426.37 through January 4)).

Strength above September 14 S&P 500 intraday high at 1474.51 would be required to re-assert bull market begun in March 2009.

Daily MAAD has continued to move lower since peaking on December 20. Daily and Weekly MAAD Ratios were last near “Neutral“(.88 and .96, respectively).

CPFL was negative by 2.5 to 1 last week on sharply lower options volume. Weekly CPFL Ratio was “Oversold” at .72.

Cumulative Volume (CV) in both S&P 500 and S&P Emini has continued to under perform relative to S&P 500 pricing since November 16 short-term low.

From our point-of-view, not only has the broad market been struggling to gain traction on the upside since May 2011 when all of our key indicators peaked, but despite at least three attempts on the intermediate cycle (October 2011, June 2012, and most recently in November 2012), investors who have based their decisions on movement in the major indexes have continued to see little net improvement in portfolio valuations for the better part of the past two years. Of course there have been exceptions to that rule. Apple (AAPL) nearly doubled in the same time frame before pulling back nearly 200 points and 30% after the September 2012 highs. But on the flip side, Netflix (NFLX) sank more than 80%.

Market Overview – What We Think:

While short-term trend has quickly corrected back toward “Neutral” levels over past several sessions, what is important about reversal of recent short-term rally begun after November 16 lows (1343.35—S&P 500), is that S&P 500 has been unable for past 3 ½ months to better high (1474.51) made back on September 14.

Because long-term trend remains intact to extent uptrend remains positive, nothing but strength above that September 14 S&P high (1474.51) will re-assert bull trend that is about to its fourth year.

If a presumption is made that new highs will follow, given fact Value Line index made new all-time high on December 20, then why have NONE of our key indicators that have reliable long-term records not been prescient enough to also predict new highs?

And why, if this bull market is so healthy, have ALL of the major indexes been limited for the better part of the past two years to percentage gains that could have been exceeded by holding far less risky investments?

Quite simply, another failure on the upside will only underscore notion that strength over past two years has been increasingly driven by weaker and weaker hands. In that vein, we continue to wonder how much longer this market will be able to shake off negative indicator divergences.